Hawker recoups losses; YRC debt unchanged on deadline extension; Clear Channel remains active

By Stephanie N. Rotondo

Portland, Ore., Dec. 16 - The distressed debt market was firm to unchanged during Wednesday trading, though one trader deemed the session "spectacularly boring."

Hawker Beechcraft Acquisition Co. LLC managed to regain some ground it had lost in Tuesday's session. Traders saw the bonds improving by about 5 points as the company tried to reassure investors that a recently announced cancellation would not harm the bottom line.

Meanwhile, YRC Worldwide Inc. once again extended the deadline for its debt exchange offer, as the company has not yet hit its minimum threshold participation. But the bonds were little affected, ending unchanged.

In unsurprising news, Clear Channel Communications Inc.'s bonds remained the clear dominator of the day. The market is anticipating pricing on a new issue sometime this week.

Hawker recoups losses

Hawker Beechcraft Acquisition's bonds were "reasonably active," a trader said, as the company held a conference call to discuss a recent financial update.

The trader said "$20-odd million" of the 8½% notes due 2015 traded at 64 bid, 65 offered. That was up from levels around 59 on Tuesday.

Another trader said the notes "came back some," ending 5 points better around 65. He noted that the issue had lost 10 to 12 points in Tuesday trading.

"They were active," said yet another source, who also pegged the bonds in that 64 bid, 65 offered context. He added that they had opened around 60 before gaining 5 points by the end of the day.

Late Monday, the Wichita, Kan.-based aircraft manufacturer said that NetJets had canceled a "significant" number of orders. The cancellation of the unspecified number of business jets will result in an order backlog reduction of about $2.6 billion, the company said in a press release.

But in a conference call Wednesday morning, W. W. "Bill" Boisture Jr., chairman and chief executive officer, said that the nixed agreement would have "minimal effect on our liquidity, earnings and deliveries in 2009 and 2010."

"NetJets has been a customer of ours since 1997, and there have been occasional cancellations and reorders before, but the fact is that while NetJets accounts for a significant portion of our order backlog, it represents just 10% of our sales volume, and less than 5% of our revenue," Boisture said.

Also in the release issued Monday, Hawker provided preliminary results for the fourth quarter. The company is anticipating posting revenue of $1.1 billion, bringing the total-year revenues to $3.2 billion. Operating income for the quarter is expected to fall between zero and negative $15 million. Full-year operating loss is forecast between $725 million and $740 million.

YRC unchanged as deadline extended

YRC Worldwide's debt ended "kind of right where it has been," according to a trader, as the company extended the deadline on its previously announced debt-for-equity swap.

The extension marks the second time the company has pushed out the deadline as it seeks to get 95% participation in the deal. Thus far, 75% of bondholders have validly tendered their debt.

The trader saw the 8½% notes due 2010 at 61.5, with a little over $6 million changing hands. Several other sources also pegged the issue with a 61 handle, deeming it sideways on the day.

Another trader said US Freightways' 8¼% notes due 2010 had "some activity" but stayed at 61-61½ "all day long," which he called "sort of unchanged."

The Overland Park, Kan.-based trucking company is looking to exchange its 8½% notes, as well as its contingent convertibles, in an effort to stave off a bankruptcy filing. Those that participate in the exchange will receive common and preferred stock.

The company said that it was "pleased with the progress it is making on the exchange offer and will continue to work with noteholders to increase the level of support for the recapitalization, which the company commenced following several months of ongoing, active implementation of its comprehensive plan," in a press release.

"The plan is designed to place the company on a more solid financial base with an enhanced capital structure and improved operations and cost structure, making it more competitive and well positioned to take advantage of any upturn in the economy."

Bondholders now have until 11:59 p.m. ET on Dec. 17 to tender their holdings.

Clear Channel remains active

As per usual these days, Clear Channel Communications' notes dominated trading, market sources reported.

A trader said "another $40 million to $50 million" of the 11% notes due 2016 traded "up a little bit" to around 73.5. The 10¾% notes due 2016 were meanwhile up "a point and change" around 80.25, on about $40 million traded.

Another trader said the credit "continues to be active," placing the 11% notes at 73.5 bid, 74 offered, a 2-point gain.

At another desk, the bonds were called the day's "most active," with the 11% notes ending at 72.25 and the 10¾% notes around 80.

Another trader declared that "CCU [i.e. Clear Channel] "still had a big day" - its fourth in a row, amid market expectations for its upcoming new deal. "I kept seeing that name all day long."

He saw Clear Channel's 10¾% notes due 2016 trading in an 80-81 context and finishing right around 80 bid, which he said was "up another point." He said there was "good volume, as they were waiting for the deal."

He also saw "huge volume as well" in the company's 11% notes due 2016. These ended up around the 72 level, which he called unchanged -- but said the issue was "a big volume trader."

A market source said that about an hour before the close nearly $30 million of the 11s had changed hands and more than $20 million of the 103/4s, making them easily the busiest bonds in Junkbondland. Unlike the previous trader, he quoted the 11s up some 2½ points on the day at 731/2, while seeing the 103/4s gaining 2¼ points to above the 80 level.

Another market source meantime saw the company's 6 7/8% notes due 2018 more than 3 points ahead on the day at 571/2. Its 6¼% notes due 2011 firmed by 2 1/8 points on the day, on somewhat less volume, to 94 1/8 bid.

This week, the San Antonio-based multimedia company is expected to price a $750 million new senior unsecured issue. Proceeds will be used for prepay a portion of an intercompany note that matures in August.

Cooper DIP loan revised

Cooper-Standard Automotive Inc. reverse flexed pricing on its $175 million debtor-in-possession term loan and gave lenders until 5 p.m. ET on Wednesday to commit to the revised deal, according to sources.

The DIP term loan is now priced at Libor plus 600 basis points, down from initial talk of Libor plus 650 bps, sources said.

As before, the loan has a 2% Libor floor and is being sold with no original issue discount.

Deutsche Bank is the lead bank on the deal.

Proceeds from Cooper-Standard's DIP term loan will be used to refinance an existing DIP loan that will be repaid at a price of 101.

Maturity on the new DIP loan is Aug. 3, 2010, the same as the maturity on the existing DIP loan.

Through this transaction, the company is basically just trying to reprice its existing DIP term loan, which carries an interest rate of Libor plus 950 bps and includes a 3% Libor floor.

Allocations on the new loan are expected to go out on Thursday.

Cooper-Standard, a Novi, Mich.-based manufacturer and marketer of systems and components for the automotive industry, obtained the existing DIP loan a few months ago when the primary market was not nearly as strong.

GM gains

A trader said that General Motors Corp.'s bonds "continued to move higher today," a day after GM firmed on the company promise to have its debt to the government repaid by this coming June. He saw its benchmark 8 3/8% bonds due 2033 up a point at 26 bid, 27 offered. "There was some trading, higher than [Tuesday] - some trading, but not a lot of trading."

Another trader had seen the GM long bonds up ½ point at 25½ bid, 26½ offered, while GM's domestic arch-rival, Ford Motor Co.'s 7.45% bonds due 2031, were unchanged at 89 bid, 90 offered.

A trader saw Visteon Corp.'s bonds "well quoted today, but no trades." He said that its 8¼% notes due 2010 were quoted higher at 26 bid, 28 offered, "but I didn't see trades in it."

He meantime saw the company's 7% notes due 2014 were ending at 28 bid, 30 offered,

"very much higher from [Tuesday], " characterizing it as "a solid 1½ points" rise. He did see that bond actually traded, calling it "the active issue - it had more active trading."

Broad market mixed

Also in distressed territory, a trader said that Ahern Rentals Inc.'s 9¼% notes due 2013 were "moving higher."

However, he added that the bonds had not traded, but were being quoted at levels better than on Tuesday. He quoted the bonds at 55.5 bid, 57.5 offered, compared with 53 bid, 54 offered previously.

CIT Group Inc.'s bonds were "active, as usual," according to another trader. But he said the notes drifted a bit lower, like the 7% notes due 2017, which ended at 87.25 bid, 87.75 offered.

A further trader agreed that CIT's bonds were "pretty steady today," pretty much unchanged, with its five issues of 7% bonds due from 2013 to 2017 mostly staying in the upper 80s to lower 90s and the five series of 10¼% notes due from 2013 to 2017 holding around 102-103, the levels both of those bonds assumed in the several days which they've traded since they were issued upon the commercial lending company's exit from Chapter 11 last Thursday.

"I'd say they were active, but unchanged," he said, seeing the 7% notes due 2017 at 87-88, unmoved but "on good volume, really good-sized trading."

In the gaming arena, MGM Mirage's 7 5/8% notes due 2017 finished unchanged around 78.5, on about $20 million traded, a trader said.

A trader saw Six Flags Inc. "moved a couple of points" to the mid-20s region , quoting the 8 7/8% notes due 2010 at 25½ bid, which he called up 1½ points. "They're all quoted pretty much the same way," he said.

-Paul Deckelman and Sara Rosenberg contributed to this article.

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